Firoka Group, preferred investment partner for the redevelopment of Alexandra Palace in North London, has pulled out of the £55m project after more than a year of negotiations with the Alexandra Palace Charitable Trust.

Plans for the palace, fondly referred to as Ally Pally, have been ongoing since 2005. The developer, Firoka Group, headed by Firoz Kassam – former chair of Oxford United Football Club – was appointed as the preferred investment partner in January 2006.

Firoka's plans included a 150-bedroom hotel, bars, restaurants and public leisure facilities. New proposals will now be presented to the board of trustees within the next three months.

Matt Cooke, chair of the trustees, said: "As this option for moving forward closes I am determined that we will grasp the opportunity this now gives us to explore new ways of realising our objective of securing Ally Pally's future."

In 2007, the High Court ruled against the Charity Commission's decision to allow Haringey Council – owner of the trust and the palace – to grant the developer a 125-year lease for the property in order for the work to go ahead.

The decision came after public opposition, most notably from the Save Ally Pally group, which sought a judicial review that ultimately forced the trustees to reapply to the commission for a new long-lease.

"The trustees will now focus on reviewing the various options open to them in order to ensure that the charitable objectives of a public resort and recreation ground are maintained, " said Cooke.